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A proposed "mega brothel" in Auckland's CBD would be an insult to the city's heritage and offensive to residents, according to public submitters.

At the second day of a resource consent hearing today Aucklanders had an opportunity to voice their opposition to John and Michael Chow's Penthouse Club on Victoria St, where the historic Palace Hotel once stood, opposite SkyCity.

Prostitution was compared to cigarettes as a "legal activity but not a desirable one" that will degrade the city, by one submitter.

"It will force families with children to avoid the area, reducing economic activity," Roy Menzies said.

A brothel in the central city would cause nuisance, offensive behaviour and create an environment like Hunters Corner in Papatoetoe, he said.

Lawyer for the Chows, Russell Bartlett, objected to discussions about the planned brothel activity - as the hearing was about the building not prostitution.

"The applicant is paying for this hearing. There is no application for consent for a brothel, anyone addressing that topic is simply in the wrong place," Bartlett said.

Chairman of the hearing David Kirkpatrick agreed, stating a review of the permitted activities was not within the panel's authority.

"There can be a brothel on level three on any building in the area," he said.

A number of submitters were also opposed to the apparent disregard for the city's heritage by the Chow brothers.

The Palace Hotel was demolished after being damaged while under their care.

Coordinator of the Westmere heritage Protection Association, Lisa Prager, objected to the way the destruction of the building had been "normalised".

"The reason the Palace Hotel is not there today is because it collapsed. It collapsed because the owner (the Chows) failed to protect and ensure all requirements were adhered to during their attempt to renovate," she said.

Prager today filed a complaint with police about the circumstance surrounding the hotel's collapse and requested the hearing be stopped and resource consent refused until it was resolved.

The panel again refused to take action it saw as outside its authority.

"Historical matters are outside the restricted discretion we have. In terms of an enquiry into the collapse of the hotel we have no authority," Kirkpatrick said.

If Auckland was to be considered one of "the world's most liveable cities" heritage preservation must be strengthened, said local resident Helen Geary.

If the project was to go ahead Geary asked if the Chows might show good faith to Auckland by committing to the restoration of heritage buildings.

"The owners should be subject to some form of mitigation for the loss of a listed heritage building. The owners might like to contribute to the restoration of another inner city heritage building - the St James theatre for example," she said.

The proposed Penthouse Club will feature a ground level bar and restaurant. A first-floor mezzanine will host a brothel and accommodation will be located on the third and fourth floors. A strip club will occupy the first and second floors. Hotel rooms will be on the fifth to eighth floors.

About 20 public submitters are expected to speak at the hearings over the next two days.